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Primary Question for Adidas

Primary Question for Adidas. Does Adidas's corporate strategy, including recent acquisitions and restructuring, stay true to its brand while positioning itself to improve shareholder value and challenge Nike as the leader of the global sporting goods industry?. Secondary Questions.

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Primary Question for Adidas

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  1. Primary Question for Adidas Does Adidas's corporate strategy, including recent acquisitions and restructuring, stay true to its brand while positioning itself to improve shareholder value and challenge Nike as the leader of the global sporting goods industry?

  2. Secondary Questions • What enabled Adidas to be the market leader in the past? • How did Adidas lose the lead to Nike? • What has the Adidas brand represented in the past and what does it represent today? • How has Adidas' corporate strategy changed over time, specifically before and after the 2005-2006 restructuring? • Have Adidas' acquisitions helped improve their position against the competition? • What role do developing countries have in Adidas's future success and how is Adidas positioned in those countries? • Should Adidas be concerned about losing North American market share to Nike? • Is there another corporate strategy Adidas should be pursuing?

  3. What enabled Adidas to be the Market Leader in the past?

  4. Product Innovation Analysis – Adidas was an early entrant into athletic shoe industry. They developed many of the features still present in shoes today. Strong presence in Olympics and soccer. Created a strong brand based on high quality, innovative products that top athletes choose to use in training and competition.

  5. Marketing Innovation Developed strong following with top track and field athletes. Applied this same model years later with soccer shoes and apparel. Successful because adidas was creating innovative, high quality products. Product innovation enabled marketing innovation. Different than Nike – marketing is what set them apart from the start.

  6. How did Adidas lose the lead to Nike?

  7. What has the Adidas brand represented in the past and what does it represent today?

  8. How has Adidas's corporate strategy changed over time, specifically before and after the 2005-2006 restructuring?

  9. Adidas Evolving Strategy Return to form via restructuring… Loss of focus… Design and Innovation, differentiated image for brands, improved retail and supply chain Focused on Puma, while Nike underestimated. Tries to catch up via acquisitions which yields product breadth instead of specialization. Adi’s leadership… Focused on athletic footwear/apparel. Success factors are marketing and product innovation.

  10. Adidas’ Current Strategy

  11. Have Adidas’s acquisitions helped improve their position against the competition?

  12. Salomon Acquisition: Was it Successful? • Analysis:Paid 1.5bn to diversify product line. Surpassed Reebok world’s 2nd largest sporting goods company, however…

  13. Adidas’s Stock Price • Stock price fell soon after acquisition in 1998, Salomon divested except for Taylor-Made Golf line. Adidas overpaid for acquisition.

  14. Adidas after Salomon was divested • Net addition was TaylorMade golf

  15. TaylorMade-Adidas Golf Sales by Product Line Conclusion: TaylorMade/Adidas has been able to keep sales up through athlete endorsements even though USGA rules have limited tech advances & an industry decline in the number of golfers.

  16. 2007 TaylorMade/Adidas Golf Sales Breakdown Conclusion: Use Adidas’s marketing model of track & field/soccer shoes to gain more sales in footwear & apparel.

  17. SWOT Analysis for Reebok

  18. Reebok Acquistion On paper it looks like Reebok’s product portfolio, endorsements and relationships round out Adidas and together they can join forces to overtake Nike. Issue is can management overcome Reebok’s reputation for poor quality and lack of innovation? Can two companies come together with such different cultures and focus? Adidas – product innovation and commitment to quality Reebok – marketing focus

  19. What role do developing countries have in Adidas's future success and how is Adidas positioned in those countries?

  20. Adidas is a global player 43% of sales from Europe, which is slowest growth market Encouraging that #1 in developing eastern European market, Russia expected to be most profitable market in Europe by 2010 2006 acquisition of Reebok not enough to overcome Nike in North America Growing number of sales in Asia market, fueled by adidas success in China. Strong demand and large population

  21. Net Sales in Emerging Markets Analysis – strong growth trend in sales in two very attractive emerging markets. Growth may be result of Adidas brand strength in soccer, world’s most popular sport.

  22. Regional Footwear/Apparel Markets Analysis – Adidas is strong in several developing markets (Eastern Europe, China) but its focus and acquisitions have been geared towards overtaking Nike in the large, but slow growth North America market.

  23. Should Adidas be concerned about losing North American market share to Nike?

  24. Retail Store Strategy

  25. Adidas AG Geographic Revenue Performance Key Growth Potential: Europe – continue focus on soccer (including endorsements) and build brand loyalty Asia/Latin America – increase distribution network and brand awareness - All three regions averaging double-digit growth rates

  26. Revenues from Asia: 1999 – 13% of total 2007 – 35% of total Decreasing reliance on U.S. Market: 1999 – 69% of total 2007 – 52% of total Metalwoods currently hold number one ranking. Irons hold less than half market share of industry leader Golf balls have seen limited success Over 70 touring pros lift apparel presence. Conclusion – TaylorMade should hold U.S. market share in U.S. given the brand’s strenghts, however, TM is only 8% of Adidas AG global revenues. TM cannot help Adidas overtake Nike in U.S. market

  27. Adidas Global Revenue Sources (2007) Conclusion – The majority of Adidas’s revenue streams are outside U.S. market and are growing significantly – let Nike lead U.S. market but dominate Europe and emerging markets.

  28. Reebok Global Revenue Sources (2004) Conclusion – Use Adidas’s control and production efficiencies to enhance Reebok’s distribution network in U.S. to increase U.S. revenues.

  29. Is there another corporate strategy Adidas should be pursuing?

  30. Alt Strategy Options • Use Adidas as revenue driver outside of U.S. market – restructure Reebok strategy to capitalize on historic revenue performance in U.S. • Decrease number of Adidas retail outlets in U.S. - convert to Reebok retail • Increase Reebok U.S. endorsements • Use Adidas global distribution to further increase TaylorMade international revenues

  31. Slides that follow still need to be placed or cut.

  32. External Environment: PEST

  33. Porter’s 5 Forces

  34. Porter’s Five Forces

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